Picks of the Day October 19, 2017

Indexes Crack Resistance, Breaking New Highs!

The major indexes cracked past one resistance level after the next. The Dow Jones recorded sharp gains on Wednesday, closing above the 23,000 point level for the first time ever, after tech giant, IBM, reported better than expected quarterly results. The Dow Jones, made up of 30 stocks, soared 160.16 points to the 23,157.60 level.

When push comes to shove, this is only a psychological level, but it does raise the question: How much higher can the market go?! All economic figures point to there being more room for gains and we certainly wouldn’t be surprised to see the index cross past the 24,000 point level come year’s end, especially if the tax reform initiative goes through.

IBM beat out analysts’ forecast by 2 cents, after having reported earnings of $3.30 per share for the past quarter on revenues of $19.15 billion. The stock soared 9%, recording its best trading day since 2009. IBM is traded at a modest price valuation and is likely to continue to benefit from its company reorganization. More than that, though, the company pays out a dividend of 4.1%, so it seems that the stock can attract more value investors.

The earnings season has gotten off to a strong start, with 81% of companies hitting their bottom line earnings forecasts, while 73% have outstripped their sales forecasts. As long as we continue to see a stable economy and reasonable earnings reports, the path is paved for the market to break past resistance levels and conquer even higher levels.

Thursday: The earnings season continues today at full force. After closing, yesterday, AA, AXP, EBAY, and UAL, reported, and investors are expected to focus on them today during trading. Before opening, today, PM, TRV and VZ will be reporting.

Traders are also expected to pore over the weekly initial unemployment claims report before opening at 8:30 N.Y. time, and the Leading Indicators Index at 10:00.

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